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New York City Merchant Cash Advance Lawyers Can Provide Debt Relief

Running a small business in New York City can be tough. With high rents, taxes, and operating costs, many business owners turn to merchant cash advances to help cover expenses. But these loans, which use a business’s future credit card sales as collateral, often have predatory terms and can leave entrepreneurs drowning in debt. That’s where experienced New York City merchant cash advance lawyers can help.

How Merchant Cash Advances Work

A merchant cash advance (MCA) isn’t really a loan at all. Instead, an MCA provider essentially purchases a portion of a business’s future credit card sales, at a steep discount. So if a business is approved for a $100,000 MCA, they may have to pay back $150,000 or more over the next couple years.The payback amount is taken automatically as a percentage of daily credit card sales, which means there’s no fixed monthly payment. This can help businesses during seasonal slow periods. But when sales are good, a large chunk gets diverted to the MCA provider, leaving less cash available to run the business.

The Problem – Predatory Lending Practices

While merchant cash advances provide quick access to capital for struggling businesses, the terms are often predatory:

  • Effective interest rates typically range from 30% to 300% APR
  • Providers use daily repayment rates rather than APR to obscure actual costs
  • Agreements allow providers to debit more than the contracted percentage when they deem the business is doing better, leaving merchants short on cash
  • Onerous default clauses let providers take actions that further damage a business, like debiting bank accounts or forcing them to close

These practices trap business owners in cycles of debt and make it impossible to pay back the advances. Fortunately, New York City has laws that protect local businesses from some of these predatory practices.

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New York City’s Small Business Truth in Lending Act (STL)

New York City’s Small Business Truth in Lending Act (STL) requires MCA providers to clearly disclose important loan terms, including:

  • Total repayment amount
  • Term length
  • Daily repayment percentage
  • APR equivalent

The law also caps repayment amounts at 2.5 times the original advance and limits personal liability provisions. These protections provide more transparency and help level the playing field for businesses seeking merchant cash advances.

Working With a Merchant Cash Advance Lawyer

If you feel trapped in a predatory MCA agreement, a merchant cash advance lawyer can review your case and help you find solutions. An attorney can:

  • Audit your MCA agreement to see if the lender violated any provisions of New York’s STL or other consumer protection laws. Even technical violations may provide leverage to get the terms changed or the balance reduced.
  • Negotiate with the MCA provider to reduce the interest rate or daily repayment percentage. Many providers settle for less rather than risk a lawsuit.
  • Help refinance the balance with another provider at better terms. Refinancing effectively starts the clock over and lowers payments.
  • In extreme cases, file litigation to invalidate the agreement or recover damages from the MCA provider.

When negotiating with merchant cash advance companies directly, business owners are often at a disadvantage and struggle to get predatory terms amended. But lawyers have the legal background and negotiating skills to stand up to these companies and fight for fair treatment of their clients.

Finding the Right Merchant Cash Advance Lawyer

With so many options, it can be difficult to identify the best merchant cash advance lawyer for your situation. Here are a few tips:

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  • Look for attorneys with specific experience dealing with merchant cash advance agreements. This is a complex and highly specialized area.
  • Understand billing arrangements upfront. Many lawyers work on contingency, taking a percentage of any savings or settlement achieved. Others charge hourly fees.
  • Search lawyer directories like Avvo and FindLaw to read reviews and compare credentials.
  • Check with your local NYC Bar Association for referrals or recommendations. Well-connected lawyers often have better success negotiating with merchant cash advance companies.
  • Meet with a few lawyers before deciding. Make sure you clearly communicate your objectives and find someone who understands your business and is eager to help.

While an experienced merchant cash advance lawyer may not be cheap, the long term benefits typically far outweigh the costs. There are often many ways to challenge predatory agreements, reduce balances, and save a struggling small business. With so much at stake, legal help can provide some much needed hope.

Alternative Small Business Financing Options

Rather than getting caught in another predatory merchant cash advance agreement, many businesses seek alternative financing with better terms after working with a lawyer. Some options include:

SBA Loans – The Small Business Administration offers various loan programs to support small businesses. Loan amounts are higher and interest rates lower compared to merchant cash advances.

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Business Credit Cards – Business credit cards allow you to borrow against future sales. And while interest rates may still be 15% or more, they provide more flexibility than merchant cash advances.

Community Development Financial Institutions – Non-profit lenders like Seed Commons NYC provide fair lending services and business assistance.

Crowdfunding – Raising small amounts from customers via crowdfunding platforms like Kiva can help supplement cash flow during tough times.

Final Thoughts

Predatory merchant cash advance practices trap many well-intentioned New York City business owners in debt. But with the help of an experienced merchant cash advance lawyer, these agreements can often be challenged or renegotiated. Lawyers also provide advice on alternative financing options or ways to supplement income as needed.If you feel overwhelmed by a merchant cash advance agreement, don’t wait to seek legal assistance. An attorney can review your case and come up with creative solutions to help get your business back on track. There are always options, so don’t lose hope. The expert advice and negotiating leverage of a merchant cash advance lawyer can help ensure your business survives this difficult period.




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